The stakes in trade liberalization

With many of free trade advocates nervous about the upcoming WTO meeting in Hong Kong, Mr. James Glassman at Tech Central Station makes a few excellent points. He writes:

The World Bank has found that the total gain to the global economy from trade liberalization in agriculture —— the sticking point in Hong Kong, where I'll be next week —— is $248 billion. Of this total, the gain to rich countries is $106 billion; to poor countries, $142 billion.

But out of the $142 billion gain to poor countries, the gain that comes from removing trade barriers in rich countries is only $31 billion. The gain to poor countries that comes from removing their own barriers is $111 billion —— nearly four times as great.

A new report by Australian trade expert Alan Oxley for World Growth, one of the rare NGOs that promotes market solutions to reduce poverty, concludes that "trade barriers in developing country economies block more trade than barriers in developed economies."

One reason, in fact, that many developing countries remain mired in poverty is that they don't open up to imports. The World Bank says that average tariff rates for agriculture in the U.S. are 9 percent and in the European Union 20 percent. But rates for developing countries are much higher: for example, India, 101 percent; Venezuela, 67 percent; Philippines, 47 percent.

If the meeting in Hong Kong does fail, as widely expected, liberals around the world, led by the editors at New York Times, will predictabily blame America for the woes plaguing much of the developing world. 

As pointed out at the Thinker numerous times, poor governance and internal conflict are the main reasons many developing countries are failing to move up the economic ladder.

Glassman is exactly right in advocating leaders in the developing world should announce in Hong Kong that they're ready to tear down the import walls that deny their own prosperity.

Brian J. Schwarz   12 10 05